Applied Digital completes $1.59 billion bond financing amid strong market confidence in AI data center investment.
Applied Digital (Nasdaq: APLD) completed a $1.59 billion private offering through its subsidiary APLD ComputeCo 3 LLC of senior secured notes due 2031 with an interest rate of 7.000%.
The company will use the net proceeds to provide 150 megawatts of critical IT load for building ELN-04 at Polaris Forge 1, its AI data center park located in Ellendale, North Dakota.
The notes were issued at par value, sold to qualified institutional investors pursuant to Rule 144A and to non-U.S. purchasers under Regulation S, with Goldman Sachs representing the initial purchasers. Interest will be paid semi-annually at an annual rate of 7% beginning December 15, 2026, with the notes maturing on June 15, 2031, unless redeemed or repurchased early.
The proceeds will also be used to repay the principal and accrued interest on a $300 million transition loan Applied Digital obtained from Goldman Sachs Bank USA, announced in May, with a 364-day term and interest at SOFR plus 275 basis points. These notes are senior secured debt backed by first-lien mortgages on substantially all assets of the issuer and its guarantors, replacing short-term construction borrowings with five-year secured debt.
Polaris Forge 1 park is anchored by CoreWeave, with Applied Digital finalizing a 400-megawatt long-term lease in August 2025, with expected total lease revenue of approximately $11 billion. This financing followed a $2.15 billion senior secured notes offering that closed in March 2026, which was used to finance the company's Polaris Forge 2 park located in Harwood, North Dakota.
Illinois Governor JB Pritzker signed Senate Bill 3019, as part of the state's $55.9 billion fiscal year 2027 budget, imposing a 0.2% tax on cryptocurrency transactions, expected to generate over $800 million in additional tax revenue.
The Digital Asset Privilege Tax Act will take effect on January 1, 2027, imposing a 0.2% tax on the value of digital assets involved in each transaction, with out-of-state brokers required to comply once their Illinois sales reach $100,000. Unlike capital gains or income taxes, Illinois's tax does not wait for profit realization but taxes the transaction itself, regardless of whether customers profit from the transaction.
The Innovation Crypto Council calls the measure "the nation's harshest digital asset tax" and warns it will have a "profound chilling effect" on Illinois's digital asset activity. Chicago hosts major crypto and trading firms such as Jump Crypto and Bitnomial, and industry groups worry the tax will prompt these companies to relocate to more favorable jurisdictions. Industry observers note that the most likely path to modify or mitigate this tax is through litigation, as the measure was inserted into a large budget bill rather than debated as standalone legislation.
In private credit, Marc Pinto, head of global private credit at Moody's Ratings, warns that AI infrastructure is reshaping the lending market, while software-intensive loan portfolios face dangerous refinancing headwinds. Pinto said on Bloomberg's Open Rate show on June 16 that the sector is entering a "more complex and volatile phase," with asset-backed lending around data centers and energy growing rapidly, while software debt portfolios face increasing uncertainty.
Pinto said this is "truly a tale of two cities: the best of times and the worst of times," describing how the largest tech companies and top private credit firms "dance" together to finance data center construction. Business development companies have on average about 25% software company exposure, leaving lenders uncertain whether this exposure represents opportunity or risk as AI reshapes competitive dynamics.
Many loans now appearing on non-accrual lists originated in 2020, 2021, and early 2022, and Pinto says these loans were signed in what he calls a "Goldilocks market" with near-zero interest rates and generous growth assumptions. Pinto says the first major refinancing wave will emerge around 2028, which will be the ultimate sorting mechanism, adding that "until we see the first refinancing wall around 2028, we probably won't know how this plays out."